'Last' casino license holder frets opening of new competitors

Illinois lawmakers considering expansion of gambling as Neil Bluhm to open site in Des Plaines in July

January 02, 2011|By Melissa Harris | CHICAGO CONFIDENTIAL

When Neil Bluhm decided to rebid for Illinois' 10th casino license, he believed it would be the last one awarded by the state.

After a decade of work and a $75 million personal investment, Bluhm's Des Plaines casino is expected to open in July.

But if the General Assembly passes a major gambling expansion bill as early as this week, 11 more facilities could open right behind his. In fact, his casino could be ringed by five new competitors within 30 miles.

"We get crushed … before we even open," said Bluhm, a Chicago real estate investor who has opened a casino a year for the last three years in other states. "Just draw a map of the proposed gaming facilities. They form a tight semicircle around Des Plaines. We bid on what was supposed to be the last casino license granted by the state, now we'd be surrounded by casinos. This is not the way to attract businesses."

The measure has cleared the Illinois Senate. The question now is whether members of the House and Gov. Pat Quinn are desperate enough to trade more than 26,000 new seats at slot machines and gambling tables for jobs and revenue during the eight-day veto session, in which 18 lame-duck House members will be casting votes.

In order to line up support, the bill's architects have doled out a series of benefits to opponents. Past attempts to expand gambling have died under the weight of so many deals, and a review of the 358-page measure reveals a similar labyrinth of special interests, from Arlington International Racecourse investor RichardDuchossois to village mayors and existing casino operators.

For starters, Chicago would get a land-based casino with 4,000 positions. In late November, Chicago Federation of Labor President Jorge Ramirez, Chicago Convention and Tourism Bureau President Tim Roby and Gerald Roper, president of the Chicagoland Chamber of Commerce, sent a joint letter to legislators endorsing the project.

"I've always viewed this as a city-building program, not just a casino," said Roper, who said he would return to Springfield to push for House passage. "You'll be able to fill more theater dates than ever before, have more people dining in our restaurants, generating more revenue, more taxes and more jobs. … If we do this right, maybe we could attract Cirque du Soleil."

Park City, Rockford, Danville and south suburban Cook County also would get land-based casinos, with 2,000 positions each.

"Right now, I see 10 busloads driving out of Park City every weekend to Potawatomi (Bingo Casino in Milwaukee)," said Park City Mayor Steve Pannell. "I want them to stay in Lake County and spend their money here."

Meanwhile, the state's horse-racing industry would get a lifeline in 6,300 slots/electronic gambling machines, including 1,200 apiece at Arlington, Hawthorne Race Course and Maywood Park, that could operate year-round.

To try to persuade the existing casino operators to go along, the bill would allow 800 more positions each (at a price of $25,000 per spot in the Chicago area; half that amount elsewhere) and substantially lower taxes on slots and table games.

Bluhm's Midwest Gaming & Entertainment LLC also would not have to pay the remaining $72 million of the $125 million bid for the 10th license. Instead, it would have to pay a fee, a percentage of its peak adjusted gross receipts, which may or may not amount to a discount.

Still, analysts predict Bluhm's adjusted gross receipts — what customers gamble away minus what they win — would significantly decline due to the increased competition from new casinos and racetracks. That means the city of Des Plaines would reap less, as would at least 10 needy Cook County communities with whom Des Plaines is required to share casino revenue.

"They're changing the rules in the middle of game," said Des Plaines Mayor Martin Moylan, who said he would head to Springfield for more lobbying. "We were under the impression, and everyone else was, that there was only going to be 10 licenses."

The bill also grants casinos and racetracks an exemption to home rule. That means that Churchill Downs Inc., Arlington Park's owner, would not have to go to the Arlington Heights Village Board for approval to add slots at the track.

"Home rule should not be usurped," said Arlington Heights Mayor ArleneMulder. "On the flip side is the importance of Arlington Park. It opened in 1927. It's one of our oldest businesses. Annually, we generate $1 million (in tax revenue from it), even in these down times."

While Bluhm (No. 221 on the Forbes 400) certainly has the most to lose, Duchossois, who fell off the Forbes 400 in the early 1990s, might have the most to gain. He is Churchill Downs' largest shareholder and traveled to Springfield for a day last month at the request of legislators to discuss "racinos."